Will Government Exit the Mortgage Market on Schedule?

The Government and Federal Reserve are scheduled to remove their market props soon. Do you think it will happen on schedule?

Irvine Home Address ... 5054 ALDER Irvine, CA 92612
Resale Home Price ...... $420,000

Government Prepares for Foreclosure Onslaught: FHA’s 90-Day Flip Rule is Reversed

Flippers can now sell to FHA borrowers which should help lenders move their bloated inventories. Today's featured property is another Trustee Sale flip.

Irvine Home Address ... 7 SMOKESTONE 3 Irvine, CA 92614
Resale Home Price ...... $348,000

No Housing Market Bottom

Today we review current conditions to verify that we are not at the bottom of the housing market, and examine the property of a grade D HELOC abuser.

Irvine Home Address ... 17 SUNRISE Irvine, CA 92603
Resale Home Price ...... $1,528,000

Fundamental Valuation of Houses - Part 1

What they are saying about The Great Housing Bubble

"The author, Larry Roberts, is best known for his daily posts as IrvineRenter on the Irvine Housing Blog. Long before Lehman crashed, Fannie Mae was taken over, and even before home prices were dropping nationally, he was one of the few voices presenting real information on the housing bubble.

The author's background is in new housing development in Southern California. It was a good start to understanding how things worked. Supplemented by knowledge from countless posters at the housing blog, he has been able to show why home prices couldn't stay elevated. Price to income ratios, price to rent ratios, and other factors detailed in the book showed how far out of line prices had become by 2006. A full year before house prices started to crash, he was predicting it, and many of the crash's details. While some people are permanently bullish or bearish on housing, the best are able to understand and explain the mechanisms, tell you what will happen in what sequence.

The Great Housing Bubble is an excellent read, and an important one."

Brian Whitworth – Principal, FinancialPatents.com

Fundamental Valuation of Houses

The fundamental value of all housing prices is equivalent rents. Rents define the fundamental value of real estate because rental is a direct proxy for ownership; both rental and ownership provide for possession of property. Equivalent rents are a major component of the United States Government’s Consumer Price Index (CPI). [1]  According to the US Department of Labor, “This approach measures the change in the price of the shelter services provided by owner-occupied housing. Rental equivalence measures the change in the implicit rent, which is the amount a homeowner would pay to rent, or would earn from renting, his or her home in a competitive market. Clearly, the rental value of owned homes is not an easily determined dollar amount, and Housing survey analysts must spend considerable time and effort in estimating this value.” Prior to the first California housing bubble in the late 1970s, the housing cost component of the CPI was measured using actual price changes in the asset. When this bubble created an enormous distortion in this index, the rental equivalence model was constructed. It has been used to smooth out the psychologically-induced housing price bubbles ever since.

An argument can be made for the real cost of construction as the fundamental valuation of houses. If house prices in a market fall below the cost of new construction, no new houses will be built because a builder cannot make a profit. If there is continuing demand for housing, the lack of supply will create an imbalance which will cause prices to increase. When new construction becomes profitable again, new product will be brought to market bringing supply and demand back into balance. If demand continues to be strong, builders will increase production to meet this demand keeping prices near the real cost of construction.

IHB News 1-30-2010

Anyone going to the Irvine Company model homes this weekend? They've hit the reset button on our housing market, so it's time to start all over.

Irvine Home Address ... 55 PLANTATION Irvine, CA 92620
Resale Home Price ...... $849,000

The Changing Face of Flipping

Are flippers the scourge of the earth, or are they capitalists exercising their freedom to make money? Depending on the circumstances, most flippers are somewhere in between.

Irvine Home Address ... 388 FALLINGSTAR 39 Irvine, CA 92614
Resale Home Price ...... $549,000

Irvine Home Improvements Show No Bounds

Today we have another over-improved property bought at the peak. Properties like these will rival the North Korea towers for the most foolish investments during the bubble.

Irvine Home Address ... 15332 MONTPELLIER Ave Irvine, CA 92604
Resale Home Price ...... $1,250,000